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Wednesday, 6 April 2016

With the leak of the papers from Panama based Mossack Fonseca it has been revealed that the Prime Minister's late father, Ian used their services and was able to ensure a company that he ran (Blairmore Holdings) was able to appear as if it was run offshore. This was done using various methods including Ian Cameron regularly flying to board meetings that were held abroad even though the bulk of the company's business was done in the UK.

Before I start, I should make clear that it seems pretty certain that neither Cameron's father, nor Cameron himself have done anything illegal.

However, David Cameron has benefited hugely from the schemes his father used. He has inherited a large amount of money from his father's estate and it looks very likely indeed that some UK tax was not paid on profits made by the company that may have provided that money in a way that is morally dubious to say the least.

Now you may argue firstly that as nothing illegal was done here there is nothing to see and we should move on as some are doing. I am afraid I profoundly disagree. Cameron has been banging on and on about tax avoidance (see here, here and here for examples from last year) for years now accusing those who engage in it of "morally wrong" behaviour. See here for his comments when comedian Jimmy Carr was caught out:

So the Prime Minister's position on this before this latest scandal blew up was crystal clear. People who are involved in avoiding UK tax by using clever schemes like making it seem like companies are based offshore when by any reasonable measure they are actually based in the UK are engaging in immoral behaviour and should pay their UK taxes. Indeed the pressure that comments he made above put on Carr forced him to pay more tax on his money and to stop the practise that was allowing him to avoid it.

That brings us to what should happen now.

Cameron's line so far has been variously to claim that this is a "family matter" and also that he has no shares nor any money held abroad. He made comments yesterday where he told us he simply has his PM's salary, some savings from which he gets some interest and one house in London that he rents out while he is in Downing Street (although this appears to ignore the house he has in his Oxfordshire constituency but let's let that one slide as to be fair he only has that because he is an MP).

Neither of these defences are good enough I'm afraid. It is not a "family matter" whether our Prime Minister has personally benefited from tax avoidance schemes that he has been campaigning and legislating against. It is very much our business. And his comments about his current finances ignore the history of where his "savings" came from in the first place. A classic politician's way of answering the question.

I am sure Cameron, who has a notoriously hot temper and has previously invoked his father as a huge influence on his life is furious about how this is all being reported. What he needs to do now to cauterize this is quite simple. If he knew nothing about the tax avoidance schemes his father's company used then he needs to work out how much tax would and should have been paid on what he inherited had those schemes not been used and write a cheque out to HMRC.

If however he did know what his father's company was doing and knowingly inherited a large amount of money where UK tax had not been paid in a "morally wrong" way (to use his own words) and then sat on it for years then his situation is much more stark.

I know others will take a different view but on manifest hypocrisy about finances I take a hard line. Under those circumstances he will have shown himself unfit for office and he must resign as Prime Minister.

1 comment:

You do understand that Blairmore Holdings wasn't a UK registered company? And that the reason for flying out to board meetings outside the UK was entirely to ensure it was not considered a UK company? And that non-UK companies are by definition outside the UK's tax jurisdiction? We can't just go around demanding to tax every company in the world.

What very few people seem to understand (or care to want to understand) is that money that people make when working outside the UK is outside the UK's tax jurisdiction. And in this day and age of globalisation, internet commerce etc, there are more and more people who will have at some point in their lives worked outside the UK, and amassed considerable wealth while doing so. They are perfectly entitled to leave that money outside the UK and the UK cannot tax it. Thus there are perfectly legitimate reasons for people to have foreign registered companies and bank accounts in places like Guernsey etc. The mere existence of these entities does not 'prove' tax evasion any more than having a stack of £20 notes under your mattress does.